Private label frozen-food manufacturer Overhill Farms Inc. announced last week that it has signed a sales and distribution deal with McDonald's French fries supplier J.R. Simplot Co.


Overhill Farms officials said the deal is a major coup for the Vernon company, which can now tap into Simplot's huge distribution system and network of accounts that go far beyond supplying potatoes to the world's largest restaurant company.

"We believe this relationship with Simplot can provide an opportunity in the near term for us to increase our success in expanding the food service sector of our business, which is an important part of our growth strategy," said Overhill Farms Chief Executive James Rudis in a statement.

The cost and terms of the deal were not disclosed.

Overhill Farms supplies custom and private label frozen foods to retailers such as Safeway Inc.; airlines such as American Airlines Inc.; and food service companies such as Panda Restaurant Group Inc., a Chinese fast-food company based in Rosemead.

The company has grown rapidly in recent years, recording net income of $10.3 million on revenue of $239 million in its fiscal year ended Sept. 28, 2008. Three years earlier net income totaled $5.1 million and revenue $168 million. However, over the past several quarters growth has slowed.

With annual sales of approximately $4.5 billion, Boise, Idaho-based J.R. Simplot Food Group is one of the largest privately held food companies. It sells food to 25 of the top 50 restaurant chains in the United States and is the major supplier of French fries to McDonald's.

Simplot won't have exclusive distribution rights for Overhill Farms' products, but Overhill Farms spokesman Alexander Auerbach said Simplot will help solicit companies, many of which are larger than Overhill Farms' existing clientele. Simplot started marketing Overhill Farms this month.

After the Sept. 30 announcement, Overhill Farms' stock hit a 52-week high, with shares closing up 20 cents to $6.05.

Tanker Feud Reignites

Maybe the third time's not the charm for the U.S. Air Force as it seeks to replace its aging fleet of tankers.

Just three days after the Air Force issued a new request for proposals to replace the fleet a potential $40 billion deal Northrop Grumman Corp. called the process "unfair."

The Century City-based defense contractor, which is partnering with European aircraft maker EADS, won the contract last year after it was revoked from Boeing Co. in 2004 amid a procurement scandal. But Boeing protested that the second bidding process was flawed, a contention later backed by the federal Government Accountability Office, and Northrop's award was withdrawn.

Now, Northrop, in a statement issued last week, is contending that the third bidding process is starting off on the wrong foot because Boeing had been granted access to Northrop's pricing data for its previous tanker bid. Northrop said it wasn't granted similar access to Boeing's pricing data.

"With predominant emphasis placed on price in this tanker recompetition such competitive-pricing information takes on even greater importance," said Northrop President Paul Meyer in a statement. "It is fundamentally unfair, and distorts any new competition, to provide such critical information to only one of the bidders."

The Air Force has spent the last year redrafting the high-profile bidding process, vowing it would be more transparent and fair, especially given some sentiment in Congress that such an important defense contract shouldn't be given to a partnership that includes a European aircraft maker that is a direct competitor to Boeing.

The new contract is for 179 planes for delivery beginning in 2015, but it has the potential to more than double in size.

A Green Deal

Last week's decision by the Los Angeles County Metropolitan Transportation Authority to order 100 cars from AnsaldoBreda was a big boost for a planned green manufacturing corridor.

The Italian rail-car maker has committed to building the cars at a $70 million manufacturing plant that will be the anchor of a 20-acre CleanTech Manufacturing Center at Santa Fe Avenue and 15th Street, just south of the Santa Monica (10) Freeway. And the center itself would form the anchor of a planned 2,236-acre manufacturing corridor running all the way to Alameda Street.

"We view the center as the catalyst for establishing the first part of a four-mile-long CleanTech Corridor of clean technology businesses along the Los Angeles River that would be the leading center of clean tech in the country," said Cecilia Estolano, chief executive of the Los Angeles Community Redevelopment Agency, which is promoting the corridor.

The CRA is already preparing to put out bids in the next few months for the remaining six acres of space in the center. Meanwhile, construction of the 12-acre rail-car facility could begin as early as summer 2010 and would take about a year to complete, Estolano said.

Staff reporter Francisco Vara-Orta can be reached at fvara-orta@labusinessjournal.com or (323) 549-5225, ext. 241.

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